If you were a trader in the U.S, there is one thing you are fretting right about now, and this is especially true if you conducted some day-trading activity last year (2020). Yes, it’s that time of the year, you plug in your Turbo Tax engine, connect it to your brokerage account and Uncle Sam says pay up on your capital gains or else!
Creator: alfexe | Credit: Getty Images/iStockphoto
So what do you do? Roth IRA to the rescue! According to Investopedia, after my query to google on “how much does an IRA contribution reduce taxes”:
So there you go. If you don’t have an IRA account or haven’t contributed to 2020, no worries, you can still contribute for last year’s IRA contribution up until April 15th of this year. You can setup an IRA account through M1 Finance, Webull, or Fidelity. I personally would recommend M1 Finance just because it’s easier to create portfolio based passive investing strategy – you can see my article on that in How To Become A Millionaire In 15 Years.
Clearly, you can see many reasons why putting $6,000 into your own retirement plan is a much better play than giving it away to Uncle Sam!
For additional information, please refer to IRS page on tax deductions for IRAs. There are factors you may need to look into before deciding to put all your money into IRA for tax-offset, including your income level and retirement plans already offered at work.
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